In a scathing letter to the federal judge scheduled to sentence Sam Bankman-Fried next week, the chief executive of FTX Trading Ltd., John J. Ray III, launched a blistering attack on the once-prominent cryptocurrency figure. Ray accused Bankman-Fried of living in a “life of delusion” and labeled his claim that customers, lenders, and investors were unharmed by his fraud as “callously” false, emphasizing the ongoing suffering of his victims.
Ray asserted that Bankman-Fried’s portrayal of the business he left in November 2022 as solvent and safe was inaccurate. He pointed out that substantial sums of money had been stolen under Bankman-Fried’s leadership, leading to his rightful conviction by a jury on fraud and conspiracy charges in November. Bankman-Fried, aged 32, faced these charges nearly a year after his extradition from the Bahamas to New York for trial.
Once celebrated as a cryptocurrency pioneer, Bankman-Fried’s companies collapsed in November 2022, shortly after achieving significant milestones such as a Super Bowl advertisement, celebrity endorsements, and congressional testimony.
Ray sought to rectify what he described as “material misstatements and omissions” in Bankman-Fried’s sentencing submission. He refuted claims made by Bankman-Fried’s lawyer that FTX was solvent at the onset of bankruptcy proceedings, asserting that the harm inflicted on customers, lenders, and investors was anything but zero.
Drawing attention to the extensive efforts of a team of professionals who worked tirelessly to recover lost assets, Ray highlighted the immense challenges posed by Bankman-Fried’s “sprawling criminal enterprise.” He described how tens of thousands of hours were spent combing through the aftermath to reclaim funds squandered on luxury assets, private jets, and speculative ventures.
During the trial, prosecutors alleged that Bankman-Fried had embezzled over $10 billion from customers, lenders, and investors. They have recommended a prison sentence of 40 to 50 years for his crimes. Ray’s letter serves as a stark reminder of the devastating consequences wrought by Bankman-Fried’s actions and the ongoing efforts to bring justice to those affected.
Bankman-Fried’s attorney has advocated for a prison term in the single digits, citing assurances that those who suffered financial losses will eventually be reimbursed. However, John J. Ray III, CEO of FTX Trading Ltd., vehemently disputed these claims, asserting that Bankman-Fried’s victims will never fully recover their losses, contrary to his assertions that a recent bankruptcy-court hearing suggests otherwise.
Ray highlighted the discontent among many of Bankman-Fried’s victims, who were dismayed to discover that the bankruptcy code mandates the valuation of claims as of November 11, 2022. This valuation date, Ray pointed out, significantly predates current market conditions, with cryptocurrency values at that time being 400 percent lower than present. Moreover, Ray underscored that incorrect financial statements distributed during Bankman-Fried’s tenure exacerbated the plight of these victims.
Furthermore, Ray emphasized that certain funds, such as $150 million in alleged bribes to Chinese government officials, and nearly 100,000 bitcoins listed on customer statements despite only 105 bitcoins being available on the FTX.com exchange, are unlikely to be recovered. He also highlighted lavish expenditures, including millions spent on access to celebrities, politicians, and investments that lacked proper due diligence.
Ray condemned Bankman-Fried’s management of FTX, accusing him of operating with hubris, arrogance, and a disregard for legal norms, particularly considering his privileged background. He asserted that Bankman-Fried’s purported remorse is nonexistent and criticized the notion of effective altruism as propagated by him.
On the other hand, Bankman-Fried’s lawyer, Marc Mukasey, referenced a March 5 letter from debtors to the bankruptcy court, suggesting a possible full recovery for FTX investors. However, Ray’s letter underscores the ongoing legal battle over the extent of restitution owed to Bankman-Fried’s victims, painting a grim picture of their prospects for full compensation.